How do insurance companies insure such a huge sum on Life Assured with such a less premium?

Question

For eg: if a person gets himself insured for 10 Crores . however high the premium is set and however high the market goes( for market linked products) it will never be able to cover the Sum Assured within 5 years, If in this time span the Person dies , will the company be solely responsible to settle the claim.

Answer 1

Insurance companies take the premiums you pay, put part of it into short term investing (banks C.D., federal bank notes, etc) to pay claims they know are coming due shortly (people have died) and the rest of your premium they play the stock market with. Although, the stock market can and has gone down, over time, the stock market has always gone up . If you live your natural life expectancy, then they make a profit from your premiums. If you don't then they have a loss; however, with all of their clients, both the ones who let their policies expire for non-payment and the ones who live, they are going to make a profit. If you are single and have no one that depends on you for support, I would suggest that you have just enough to bury you and put the rest of the premium into a Mutual fund..

Answer 2

Insurance is based on risk sharing, meaning that lets say that the statistic shows that from a group of healthy males at the age of twenty five one out of twenty five thousand will die in an accident, than everybody in that same group will chip in two hundred dollars so the family can get the sum of five million dollars, than when they reach lets say thirty there is a bigger chance than they have to pay more to come up with that amount, so that gives you the concept of life insurance

Answer 3

They make research and statistics before they set the premium and change it when conditions change.

They expect that only a fraction of assured risks become real.

Answer 4

We subsidize coverage organizations and make health care part of employment, it is somewhat worse than socialized drugs. coverage replaced into made to cover significant medical, now to not be utilized by technique of the gov't to mandate drugs and so on; the project isn't the coverage organizations notwithstanding the very truth they are in mattress with DC. If a kindergarten instructor supplies pixie stix and soda to her school room then leaves, you does no longer get mad on the youngsters for tearing the lecture room aside on a sugar severe and performing wild, you blame the instructor for giving it to the youngsters

Answer 5

maybe its cos u only die once and its normally in old age for most people, so they get ur premium every month till you die.


sounds like a long time and a big price to pay sometimes.